Low Pay Commission recommends 3% minimum wage increase

The Low Pay Commission has recommended a 3% increase in the national minimum wage (NMW). It said that the lowest earners are now earning more, relative to other workers, than they have been for decades.

Publishing an executive summary of its 2014 report, the commission endorsed the increase, saying that the economic recovery should this year allow firms to afford the increase. This is despite previous hesitance to recommend such measures due to fears of straining small businesses.

Business secretary Vince Cable said that if the proposals, which would see the NMW set at £6.50, were accepted by parliament, it would be the first increase in real terms since 2008.

Although Labour welcomed the proposals, the party said that more needed to be done to tackle to “cost of living crisis”.

The party’s shadow business secretary Chuka Umunna said, “As well as a higher minimum wage, we need action now to earn our way out of the cost-of-living crisis like Labour’s plans to incentivise the living wage and expand free childcare for working parents. But all the Tory-led government can offer is empty promises and rhetoric.”

The LPC has also said that if the economy continues to recover, further increases could be in the pipeline.

David Norgrove, chair of the LPC said, “Provided the economy continues to improve we expect to recommend further progressive real increases in the value of the minimum wage, restoring and then surpassing its previous highest level, so that 2014 will mark the start of a new phase – of bigger increases than in recent years – in the work of the commission.”